Card not present transaction fraud continues to rise since the establishment of the EMV chargeback liability shift last October. As card present transaction fraud decreases we've seen a direct increase in card not present transactions. CNP transactions include any payment made where the card is not physically present. As predicted, The US Payments Forum 2017 report concluded that the increase in security of chip cards forced fraudsters to focus their attention to CNP. They believe that this trend will continue into 2018 and we can expect to exceed $6 billion in fraud dollars.
Related Article: What They Said About EMV Was True: CNP Fraud on the Rise
With 77% of U.S. merchants selling their goods online, more and more purchases are CNP transactions. Online shopping isn't going anywhere anytime soon and as a merchant you must look to protect those transactions. Here are 6 best practices to detect CNP fraud.
1. Establish a policy, post it clearly on your site and stick to it: Which types of orders and payment methods do you accept? What information do you require to complete an order? If you have a potential customer asking you to alter your policy for a large order, CNP fraud protection and detection alarms should be going off. Additionally, be cautious of rush orders. If you have a new client asking for a rush order, and this is not usual practice in your market, approach with caution.
2. Monitor online transactions: Sure, automation is nice and efficient. And if you are processing large amounts of orders per day, necessary. But if you sell high ticket items that are prone to fraudulent chargebacks, it is wise to monitor your online sales activity. Advanced reporting tools that flag transactions are beneficial.
4. Check and then double check addresses: If there are different "bill to" and "ship to" addresses, this could possibly be a red flag. For large suspicious B2C orders, it could be useful to do a reverse white pages look-up that will tell you all the residents that reside at that location, the age, or if the property is vacant. The IP and email addresses are equally important to check. If you have an order from a new client, take a second to look at the IP address and email. If the billing address is New York, and the shipping address is California, but the IP address is from China, review that order.
4. Use a Consumer Authentication (3D Secure Advanced) solution: Remember,
5. Signature confirmation on shipping: After an order is placed and you have determined it is not fraudulent to the best of your knowledge, take the extra step and require a signature on delivery. This service can benefit you in the case of a chargeback, especially in the case of so-called friendly fraud, which is when a legitimate cardholder fraudulently claims he/she never received the products they purchased.
6. Work with a trusted payment processor: This is paramount to all of your transactions. Working with a provider that has chargeback support, Consumer Authentication solutions, and other security enhancements and priorities is the best way to cover all the bases on detecting and preventing fraudulent online sales.
Ask Solupay how our 3D Secure Advanced product can greatly reduce your online fraud and increase your margins.